Cenvat credit cash refund barred where duty was later paid in cash and the factory had closed.

Accumulated Cenvat credit that had been used to discharge central excise duty could not be refunded in cash after the duty was later paid in cash and the factory closed. The credit, if any restoration was due, could only be returned to the Cenvat account because the scheme contained no statutory provision authorising cash refund of unutilised credit. Closure of the factory did not create a separate entitlement, and a cash refund would effectively neutralise the duty already paid in cash and undermine the statutory requirement of cash payment. The rejection of the refund claim was therefore legally correct.

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Issues: Whether Cenvat credit, which was used for payment of central excise duty and later sought to be refunded in cash after payment of duty in cash and closure of the factory, could be refunded in cash.

Analysis: The appellant had admittedly discharged duty liability through Cenvat credit when cash payment was required under Rule 49(1)(E) of the Central Excise Rules, 1944. On subsequent payment of duty in cash, the credit earlier utilized could only be restored in the Cenvat account. The scheme did not provide for cash refund of accumulated unutilized credit, and closure of the factory did not create such a right. Granting cash refund would also neutralize the duty later paid in cash and defeat the statutory requirement of cash payment.

Conclusion: Cash refund of the accumulated Cenvat credit was not permissible and the rejection of the refund claim was in law.

Ratio Decidendi: In the absence of a statutory provision permitting cash refund, accumulated and unutilized Cenvat credit cannot be refunded in cash merely because the factory has closed or the duty has later been paid in cash.

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